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ECON 101 2Midtermreview

The opportunity cost of the owners labour is the wage

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Unformatted text preview: Trade? o The fundamental force that generates trade between nations is comparative advantage. o The basis for comparative trade is divergent opportunity costs between countries. o National comparative advantage as the ability of a nation to perform an activity or produce a good or service at a lower opportunity cost than any other nation. Imports Exports Consumer Surplus vs. Producer Surplus - Who benefits more from international trade? Imports with International Trade Exports with International Trade But wait… Governments restrict international trade to protect domestic producers from competition. Governments use four sets of tools: Tariffs Import quotas Other import barriers Export subsidies Tariffs Test your und...
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